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Telephone and Data Systems Loss Narrower Than Expected - Analyst Blog

Telephone and Data Systems Inc. ( TDS ) reported fourth-quarter 2014 adjusted loss of 14 cents per share, narrower than the Zacks Consensus Estimate of a loss of 25 cents.

Telephone and Data Systems Inc. - Earnings Surprise | FindTheCompany

GAAP net loss per share stood at 15 cents compared with a loss of 6 cents in the year-ago quarter.

Revenues inched up 10% year over year to $1,297 million in the reported quarter but missed the consensus mark of $1,323 million. The company reported quarterly operating loss of $36.1 million compared with $20.9 million in the year-ago quarter.

Wireless Division

The company's wireless division United States Cellular Corp. ( USM ) reported fourth-quarter 2014 loss per share of 25 cents, narrower than the Zacks Consensus Estimate of a loss of 64 cents.

Fourth-quarter revenues of $1,008.7 million missed the Zacks Consensus Estimate of $1,020 million but increased 12% from $902.7 million reported in the year-ago quarter. Quarterly Service revenues increased 3% to $849.8 million. Revenues from Equipment sales were up by a substantial 104.9% to $158.9 million. Smartphone sales remained strong and represented 59.8% penetration among postpaid customers, up from 50.8% in the year-ago quarter. Total cell sites in service were 6,220 as compared to 6,161 in the fourth quarter of 2013.

United States Cellular exited the reported quarter with a subscriber base of 4,760,000 compared with 4,774,000 at the end of the year-ago quarter. Postpaid subscriber base was 4,298,000 against 4,267,000 at the end of the prior-year quarter and prepaid subscriber base was 348,000 against 343,000 at year-ago quarter end. In the reported quarter, United States Cellular added a net 98,000 postpaid subscribers compared with a net loss of 71,000 in the year-ago quarter. However, the company lost 2,000 prepaid customers in the same quarter compared with the loss of 26,000 customers in the prior-year quarter.

Wireline Division

Revenues from the wireline segment came in at $180.1 million, flat year over year. In the reported quarter, Cable revenues improved a whopping 101.4% to $43.3 million and HMS revenues rose 14% to $60.1 million.

At the end of the reported quarter, Telephone and Data Systems had 588,500 (down 0.7% year over year) wireline residential customers, 358,100 (down 4.0% year over year) wireline commercial customers and 267,300 (up 81.5% year over year) cable connections. Total wireline residential revenue per connection stood at $41.56, up 1.5% year over year.

Liquidity

Telephone and Data Systems exited the fourth quarter with cash and marketable securities of $471.9 million compared with $880.1 million at the end of 2013. At quarter-end, total debt was $1,993.6 million as against $1,720.1 million at the end of 2013. The debt-to-capitalization ratio was 0.33 in comparison with 0.27 at the end of the fourth quarter of 2013. In fourth-quarter 2014, Telephone and Data Systems generated a negative $101.4 million of cash from operations compared with a positive $56.7 million in the prior-year quarter. Quarterly free cash flow was a negative $328.1 million against a negative $186.3 million in the year-ago quarter.

Share Repurchase

The company repurchased 312,009 shares in the fourth quarter for an aggregate amount of $7.3 million.

Guidance

For fiscal 2015, TDS Telecom maintains its total operating revenue guidance in the range of $1130-$1,180 million. Adjusted income before income tax is estimated in the band of $280-$310 million while capital expenditure is forecasted at around $220 million.

Zacks Rank & Other Stocks to Consider

Telephone and Data Systems currently carries a Zacks Rank #2 (Buy). Other favorably-ranked stocks in the same space include Telenav Inc. ( TNAV ) and Level 3 Communications Inc. ( LVLT ). Both the stocks carry a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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